Market Strategy Case Study: Katrina's Candies

In addition, firms may want to profit maximise and gain supernormal profits because it would attract potential competitors to join their market. This is because companies such as apple, gain too much supernormal profit, it attracts other firms, such as Samsung and Orange, to join their market and share their supernormal profits. So companies may want to sacrifice their profits in the short run to prevent unwanted competitors in joining their market in order to gain supernormal profits in the long run. However this only occurs in imperfect competition because most firms only make supernormal profits in the short run and normal profits in the long run. Also a non- maximising behaviour by a firm is usually disciplined by competition in the capital market rather by competition in the goods or products market. In the capital market, if the shareholders aren’t happy with the firm’s behaviour of non profit maximising, they would sell their shares and, if a firm’s level of profits is too low, the owners may sell their business to a new owner. This would then mean managers may want to

Supply and demand is constantly changing for different products and services for a number of reasons. The good I chose to write about is the laptop I purchased to be used for school. The following are factors that could cause possible changes in the supply and demand of laptops on the market. When looking at the supply aspect of a laptop from manufacturers’ one factor that could change the supplied amount would be the cost to produce the item. If the cost to produce a laptop was to increase too much the supply may go down. Another factor would be the demand of the laptop. As long as there is demand for the laptop than the supply should be available however if the demand was to drop than the supply of the laptop could drop as well.

This occurs when a business charges the highest price for a product during the introduction stage of its lifecycle. This is typically used when introducing a new, unchallenged product into the market, ensuring high profits before the product has competition. For example, Apple set its price for its iPhone 6 plus exceptionally high due to its advanced features and lack of competitors. This ensured that Apple received high-profit levels before the iPhone 6 plus was challenged by other products. Additionally, this has seen Apple have a high product position and helped cement its brand image, as these higher prices are typically associated with a higher quality product. This has subsequently improved market share and profits.

Using the simulation as a guide the price elasticity of demand is reviewed to determine the effects of pricing strategies. Demand can either decrease or increase based on price of a product or service (Colander, 2010). Consumers tend to buy products were there is a decrease in price (Colander, 2010).

Thirdly, option is to strategically adjust the prices of their products because consumers are often very price sensitive. By doing so the company can either create more value that defines the quality and quantity of the product.

Reason: Meeting buyers needs will increase demand. Higher demand=potential increase in profit and market share.

B. Large number of firms, price maker, free entry and exit, and a differentiated product

Companies can choose many ways to set prices, skimming price strategy where a company sets a higher price than normal and a penetrating price where low initial price is set. “Pricing

It is basic economic principle that states that when there is an oversupply of a good or service, prices fall. When there is a high demand, prices tend to rise.

Firms within the fast food industry fall under the market structure of perfect competition. Market structure is a classification system for the key traits of a market. The characteristics of perfect competition include: large number of buyers and sellers, easy entry to and exit from the market, homogeneous products, and the firm is the price taker. Many fast food franchises fit all or most of these characteristics.

If market demand increases, price is bid up and economic profits are made in the short run. These economic profits attract new firms to the market, and existing firms may expand. But to produce their output, firms need resources. If the total demand for resources increases significantly, resource prices are bid up for each firm in the industry. This causes an upward shift of the average total cost curve, consistent with a higher equilibrium price at the point of zero profit.

They went on to state that competition would not solve this dilemma. This lead to a re-evaluation of the goal of corporations, from merely maximizing revenues, to maximize the value of the firm, as it was determined in the stock market.

price changes, whether they be increasing or decreasing, do not change demand ­ they change the

In oligopoly market, each firm has substantial market power with high degree of interdependence. The key for success in a oligopoly market is to gain more market share than the competitors. Increasing the price can lead to loss of market share to the competitors, so in the oligopoly market, if a firm decreases the price, the other firms will always follow, but if a firm increase the price, the other firms will not follow. The demand curve is kinked.

Firms within the fast food industry fall under the market structure of perfect competition. Market structure is a classification system for the key traits of a market. The characteristics of perfect competition include: large number of buyers and sellers, easy entry to and exit from the market, homogeneous products, and the firm is the price taker. Many fast food franchises fit all or most of these characteristics.